Splits at the Top, Revolt from Below

Outraged by the NATO bombing of the Chinese embassy in Yugoslavia, almost a million people took to the streets on the mainland. The Chinese Vice Premier Hu Jintao announced on TV that although NATO attacked China's embassy, "reform and opening up will continue". Voices questioning the pro-capitalist path have grown louder, gaining a base amongst CCP members, lower levels of the bureaucracy, the workers and youth.

The Economic Crisis

China managed a 7.8 percent growth rate for 1998, these figures however conceal massive contradictions and conflicts. According to Ming Pao Daily (Hong Kong 19 Mar 99) since 1997, China's overproduction has reached a colossal scale. The value of overstocked commodities accounts for over 98 percent of the aggregate output value. In other words, of 100 items produced, only two are sold. In late 1997 China's overstocked commodities amounted to 3 trillion yuan leaving vast resources idle.

By some estimates as much as 70 percent of state-owned enterprises are operating at a loss which is responsible for 20 to 30 percent of the banks' bad debts. The money supply has grown rapidly whilst loan efficiency has dropped rapidly. This is because low-efficiency loans represent a large percentage of bank loans. As a result, though big loans were injected again, no output was evident, and this has increased the danger of financial collapse. To resolve these problems Beijing pressed ahead with enterprise 'reform'. State enterprises were turned into joint-stock companies or sold off creating a huge increase of urban unemployment.

"Official estimates put the urban unemployment rate in 1998 at 4 percent. Hu Angang of the Chinese Academy of Sciences estimated it to be 8 percent. Feng Lanrui of the Chinese Academy of Social Sciences (CASS) estimated that if the number of unemployed in the countryside and laid-off workers as well as new entrants to the labor force are included, the unemployment rate on the mainland will hit 25 percent this year." Cheng Ming (Hong Kong 1 Apr 99)

The journal Daidai Sichao explains that of over 100 million workers at state enterprises, 30 million either have been laid-off or have not received wages and pensions. The number tops 50 million if their family members are taken into account. The population of impoverished rural areas stands at 48 million, while at the other pole over one million mainland households are millionaires.

The private sector has expanded considerably over the past year, from 24 percent to 33 percent of the national economy. Capitalist enterprises employed 13.5 million, foreign owned enterprises employed 17.5 million, add to this independent businesses, and private town and village enterprises and total private sector employment has reached over 100 million. Even these figures are an underestimate for many collective enterprises are effectively run as private companies.

CCP Factions at "Crossed Swords"

The main CCP factions are engaged in open conflict which in a distorted form represent the real struggle of contending social forces. Last year a book called "Crossed Swords" was published, it advocated the defeat of the Left creating heated controversy.

Premier, Zhu Rongji was the foremost proponent within the leadership of rapid moves towards capitalism. However, early last year, Zhu Rongji was all in favour of selling state enterprises, but at the national economic work conference late last year, he changed his tone by saying: the problem with state enterprises has nothing to do with the ownership-management relations. "The main problems are duplicate construction, mismanagement, and waste."

At the recent World Trade negotiations he offered even greater concessions to the USA than he had been given permission to and faced sharp criticism when he returned to Beijing. Zhu Rongji represents the pro-capitalist tendency within the CCP, which dominated Party membership till recently, but the mood in the CCP is shifting.

Li Peng, chairman of the National People's Congress Standing Committee was trained in the USSR. He sees China's problems not in the lack of the capitalism but in so called 'scientific management' and the technical development of industry and science. The success of the Three Gorges Dam, Hydroelectric project is to be his personal mark on Chinese history. Politically he is famous for his role in suppressing the protests on Tiananmen Square in 1989. He takes a far more cautious view of the moves towards capitalism and leans on the Left in the party to put pressure on the pro-capitalist factions.

President Jiang Zemin is wise enough to see the dangers inherent in the current phase, and has sought to slow down the 'reform' (closure and privatisation) of state owned industry and to balance between the pro-capitalists and the anti-reform factions. He has insisted that the State maintain close vigilance against threats to social stability, and called for the Security Services to "nip destabilizing factors in the bud" by which he primarily means worker activists.

CCP Left Emerges

Outside of Government the leading national figure of the Left faction in the CCP is Deng Liqun running a number of anti-reform journals and think tanks, at a recent speech he said,

"There are all kinds of 'reforms.' Whenever we see the word 'reform' we simply cannot force people to keep saying 'Support! Support! Support!' without asking any questions, or without letting them ask any questions. Such things should not be allowed in this world."

He attacked certain local governments for selling over 90 percent of public enterprises to capitalists, "turning public ownership into private ownership", "socialism into capitalism", and "workers from being the master of enterprises into employees", and depriving them of their right to.

This Left faction inside the CCP stands in opposition to the privatisation of industry, sections have begun to advocate that Workers' Congresses, (which officially are supposed to control company management) become instruments of democratic control of Industry.

The Workers' Congresses like the official unions have largely been dead shells, but it is certainly possible that they could become instruments of genuine workers control on the basis of mass strikes, demonstrations and protests against factory closures and privatisation

Protest and Terrorism

Desperate conditions have created a wave of protests and terrorism. Following the assassination of Li Peiyao, a vice chairman of the National People's Congress (NPC), Zou Jingmeng, a member of the standing committee of the Chinese People's Political Consultative Conference, was also gunned down in broad daylight in Beijing. During the past 20 years, no public security personnel were ever dispatched to protect deputies to successive NPC's. The latest NPC, however, specifically asked every delegation to be accompanied by the leaders of its public security system.

Almost the entire leadership now fears a revolt by the workers.

Cheng Ming Reported on Feb 1^st 1999, "that provinces (regions) and cities including Beijing, Tianjin, Jiangsu, Anhui, Shandong, Jilin, Qinghai, Xinjiang, Henan, and Sichuan have all told the central authorities that party and government departments at the local level have come under pressure, that public dissatisfaction has reached the boiling point. Officials from Shandong and Henan even said, 'The workers take to the streets demanding work, saying they have to live. There is a lot of public sympathy for them. What is the provincial government to do? If this situation spreads, it is entirely possible that large-scale disturbances may occur.' "

According to a report by the Chinese Academy of Social Science in the first nine months of 1998, 2,500 explosions and over 5,000 cases of demonstrations and protests occurred across the country, from Tibet to Xinjiang, from Hunan to Fujian, on all manner of issues. Laid-off workers and pensioners who have not been paid protest outside factory gates and government offices. Their demands are displayed on the banners they carry: "Give us food," "We need to eat."